The Conference Board LEI for France decreased again in May after two consecutive increases, as large negative contributions from industrial new orders and stock prices more than offset large positive contributions from the yield spread. In the six-month period ending May 2012, the leading economic index increased by 0.9 percent (about a 1.8 percent annual rate), up from the 0.4 percent decrease (about a -0.7 percent annual rate) in the previous six months. However, the weaknesses among the leading indicators have remained more widespread than the strengths in recent months.

The Conference Board CEI for France, a measure of current economic activity, increased slightly in May, and was revised upwards between December 2011 and April 2012 because of upward revisions to non-financial wage and salaries data. Between November 2011 and May 2012, the coincident economic index increased by 0.2 percent (about a 0.4 percent annual rate), a reversal from the 0.1 percent decrease (about a -0.2 percent annual rate) during the previous six months. The strengths and weaknesses among the coincident indicators have become balanced in recent months. Meanwhile, real GDP grew at a 0.1 percent annual rate during the first quarter of 2012, slightly slower than the 0.2 percent annual rate of growth in the fourth quarter of 2011.

The Conference Board LEI for France fell slightly again in May after gains in March and February; however, its six-month growth rate is still in positive territory. At the same time, The Conference Board CEI has been mostly flat during the last twelve months. Taken together, the recent behavior of the composite economic indexes suggests that economic growth in France may continue in the near term, but it is unlikely to pick up.

LEADING INDICATORS. Two of the seven components of the leading economic index increased in May. The positive contributors to the index — in order from the larger positive contributor to the smaller — are the yield spread and production expectations. The negative contributors to the index — beginning with the largest negative contributor — are industrial new orders, the stock price index, inverted new unemployment claims, building permits (residential), and the ratio of the deflator of manufacturing value added to unit labor cost in manufacturing*.

With the decrease of 0.2 percent in May, the leading economic index now stands at 113.4 (2004=100). Based on revised data, this index declined 0.2 percent in April and increased 0.4 percent in March. During the six-month span through May, the index increased 0.9 percent, and two of the seven components increased (diffusion index, six-month span equals 28.6 percent).

COINCIDENT INDICATORS. Three of the four components of the coincident economic index increased in May. The positive contributors to the index were personal consumption, wage and salaries*, and employment*, while industrial production declined in May.

With the increase of 0.1 percent in May, the coincident economic index now stands at 104.7 (2004=100). Based on revised data, this index remained unchanged in April and increased 0.1 percent in March. During the six-month period through May, the index increased 0.2 percent, with two of the four series making a positive contribution (diffusion index, six-month span equals 50.0 percent).

DATA AVAILABILITY. The data series used to compute The Conference Board Leading Economic Index® (LEI) for France and The Conference Board Coincident Economic Index®

*The series in The Conference Board LEI for France that is based on our estimates is the ratio of the deflator of manufacturing value added to unit labor cost in manufacturing. Series in The Conference Board CEI for France that are based on our estimates are number of employees and wage and salaries.

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